The railway ministry has revised the Automobile Freight Train Operator (AFTO) Scheme 2013 to allow logistics service providers and road transporters to invest in wagons and to tie up with end-users so as to market train services.

The new AFTO scheme, which supersedes the earlier AFTO Scheme of 2010, would create a win-win situation for Railways and the transporters, an official release said today.

The policy aims at increasing the Railways' modal share in transportation of automobile traffic, which is very meager at present.

In addition, the new policy provides an opportunity to logistics service providers and road transporters to invest in wagons and use advantage of rail transport to tie up with end users and market train services to create a win-win situation for Railways and themselves.

As per the new AFTO scheme, the applicant should be a registered company in India as per the Companies Act, 1956, including a subsidiary company, a joint venture company or partnership or a public sector entity in the business of logistics.

The terms of the new AFTO are:

The AFTO selected by the ministry should deposit registration fee of Rs5 crore for a period of 20 years.

The AFTO should apply to ADV/ED FM with all details for a minimum 3 rakes.

AFTO may either operate their trains between private terminals equipped to handle the traffic under a tie-up or use its own terminal/sidings for handling such traffic or move from any rail terminal to any rail terminal on Indian Railways provided suitable handling facility is available and subject to payment of terminal access charges as prescribed by the Railways from time to time.

AFTO may take new wagons on lease from a wagon leasing company subject to necessary approvals by railway ministry. It may also purchase or take on lease wagons procured under this scheme from another registered operator, in that particular category, subject to necessary approval by MOR. However, in such cases, AFTO will run the rakes as per the freight rates stipulated for AFT.

Railways will undertake maintenance of the wagons at its own cost during the currency of the concession agreement. However, in case of wagons, which will require special components for maintenance, a suitable provision will be made in the Concession Agreement so that the cost of procurement of such special components is defrayed by the investor.

Rates notified from time to time for the specific stock will be applicable for such traffic moving in automobile rakes.

The rates should be separate for rakes running as loaded and those running as empty.

Trains procured under AFT scheme will not be merged in the wagon pool of the Railways. Rakes comprising such wagons will be identified as exclusively belonging to the AFTO that has procured them. Each rake should have separate identification with the date of commercial commissioning in the FOIS.

The AFTO is free to run trains over the Railway infrastructure provided the railway terminal is open for automobile booking, and the private terminal is also willing to handle automobile traffic. No NOC will therefore be required for the routes from zonal railways.

The AFTO should, however, nominate a base terminal from where it will operate so that a base maintenance depot can be nominated by the Railways. The agreement shall be with the nominated zonal railway on which such a base depot is situated.

The operator should charge his customers for rail haulage, terminal handling, ground rent on a market determined basis and railways shall not exercise any control over such pricing/tariff.